What Is MRO? Maintenance, Repair and Operations Supply

MRO versus direct materials

The two behave so differently that managing them the same way is the root of most MRO problems.

The last row is the one that matters. A €4 seal and a €40,000 motor can stop the same line, which is why MRO cannot be prioritised by unit price.

What counts as MRO — and what does not

MRO is best handled as six groups, because each has a different demand pattern and therefore a different stocking rule:

Raw materials, components that go into the finished product, and capital equipment are not MRO — they are budgeted, approved and sourced through different routes.

Why MRO is the hardest spend to control

Four things happen at once, and each one makes the others worse:

1. The item count is enormous. A mid-size plant carries thousands of MRO SKUs, most of which are ordered a handful of times a year.
2. Demand is unplanned. Nothing tells you a bearing will fail next Tuesday, so orders arrive as emergencies rather than as a schedule.
3. The supplier tail is long. Because each item is small, buyers order wherever is quickest, and the vendor list grows without anybody deciding that it should.
4. Transaction cost exceeds item value. Raising, receiving, matching and paying for a €30 order costs more than the order. This is where MRO money actually disappears — not in unit prices.

Classify by criticality and availability

One axis is not enough. A part that stops the line and takes eight weeks to get needs a completely different policy from one that stops the line but is available from three local distributors this afternoon.

Most of the item count sits in class D and most of the management effort gets spent there. Moving class D onto a single supplier with periodic replenishment is usually the single biggest MRO improvement available.

Five criteria for choosing an MRO supplier

1. Breadth across groups. A supplier who covers one group only moves the problem rather than solving it.
2. Willingness to work from a list. MRO requests arrive as mixed lists, not as catalogue codes. Ask whether they will price a photograph, a part number and a description in the same document.
3. Written stock and lead-time confirmation before the quote. An MRO quotation without confirmed availability is a guess, and guesses are what stop lines.
4. Equivalents handled explicitly. When the requested brand is short, does the supplier propose an equivalent with its make and model stated, or quietly substitute?
5. One invoice, one account. The transaction cost above is the real MRO saving; it only appears when the paperwork consolidates.

Why consolidation pays more in MRO than anywhere else

In direct materials, consolidation buys a better unit price. In MRO the unit price is often a rounding error and the saving comes from everything around it:

None of this shows up in a unit-price comparison, which is why MRO consolidation is routinely under-valued at the tender stage.

Setting an MRO stock policy

Three rules cover most of it. First, stock class A only, and size it on lead time rather than on usage. Second, for class B rely on the supplier’s stock and put it in writing — availability you have not confirmed is not availability. Third, review the slow-movers annually: MRO stock grows by accretion, because nothing ever triggers its removal.

The measure that matters is not stock value or line-fill rate on its own, but how long the line waited. If that number is acceptable, the stock policy is working regardless of what the inventory report says.

Frequently Asked Questions